Deficit Reduction Still A Major Challenge Despite Progress

• In October 2013, public sector net borrowing, excluding the effects of financial interventions, was £8.1bn, £0.2bn less than in October 2012• In the first seven months of the current financial year, cumulative borrowing on a comparable basis was £5.8bn less than in the corresponding period of the last financial year• In October 2013, net debt excluding the effects of financial interventions was 75.4% of GDP

Commenting on the public sector finances for October 2013, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said:

“The figures show that progress has been made in reducing the budget deficit. There is now a realistic prospect that we could be £8-9bn down from the forecast made by the OBR at the time of the March budget. While improvements may be partly down to the faster rate of economic growth, the pace of reduction remains modest. Corporation tax receipts were lower than at the same point in 2012, and the job of repairing our public finances is still a major challenge. “A weaker financial sector and the fall in oil and gas reserves have created a structural shortfall in our public finances. Restoring tax revenues to their pre-recession levels will remain a struggle even after growth returns to more normal levels. The government must continue to make cuts in current spending, avoid tax increases that hinder the economy’s ability to grow further, and shift priorities towards infrastructure investment so that the economy can continue to move forward.”